The FOA said its test, while providing no guarantees, had shown that the industry "can be expected to operate with no material disruption to business operations" going into and through 2000.

"This test and its very satisfactory outcome illustrates that cooperation is the key to testing millennium readiness," Anthony Belchambers, chief executive of the London-based trade association, said in a statement."It has proved positive, not just for the derivatives industry, but for the City in general in its role as one of the world's major financial centres and for its international client base."

London's futures and options exchanges -- the International Petroleum Exchange, London International Financial Futures and Options Exchange, London Metal Exchange and OM London -- participated in the technical test lastSeptember-November.

The Securities and Futures Association, the London Clearing House, major "back office" system providers and a sampling of firms also took part.Trading input, matching and allocation were tested in systems mirroring live production, along with expiries, deliveries, settlement, margining and payment. The test did expose two date-related errors, the FOA said."But generally the overall error rate was no higher than is expected in normal operations. The problems were quickly and easily rectified and caused no disruption to the running of the test," it said.

Experts have raised concerns about potential computer malfunctions, known as the millennium bug or Y2K problem, caused by outdated computer software that may mistake the year 2000 for 1900. There are also concerns software may not recognise 2000 as a leap year.

The problem stems from the once common practice of usingonly two digits for recording the year in computer programme dates.

The city of London, one of the world's largestfinancial centres, already faced a mammoth technological challenge this year, when it had to convert millions of computers to recognise the single European currency.Despite fears of major systems errors, the introduction of the euro in January went without any major glitches.